Worldwide transfer pricing reference guide 2014

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Kuwait Taxing authority and tax law Taxing authority: Department of Inspections and Tax Claims (DIT). Tax law: Decree No. 3 of 1955 as amended by Law No. 2 of 2008. Relevant regulations and rulings The Executive Bylaws to Law No. 2 of 2008 provide for the following with respect to related party transactions: Material cost: The DIT deems the following profit margins on imported material cost: • Imports from head office 10% to 15% • Imports from related parties 6.5% to 10% • Imports from third parties 3.5% to 6.5% Design and engineering fees incurred abroad: The DIT deems the following profit margins for design expenses incurred outside Kuwait: • Design work carried out by the head office 20% to 25% • Design work carried out by the related parties 15% to 20% • Design work carried out by third parties 10% to 15% Consultancy fees incurred abroad: The DIT deems the following profit margins on consultancy fees incurred outside Kuwait: • Consultancy work carried out by head office 25% to 30% • Consultancy work carried out by related parties 20% to 25% • Consultancy work carried out by third parties 15% to 20% Related party leases: Lease expenses arising from assets rented from related parties are only allowed as a deductible expense after customs documents evidencing the value of the assets are presented to the DIT. The lease expenses will be limited to the amount of depreciation normally charged on the asset for its use in Kuwait. Intra-group financing: For the entity paying interest, the DIT normally disallows all interest charged by a related party for Kuwait tax filing purposes. Intellectual property: The DIT would determine the reasonableness of charges from related parties for intellectual property based on supporting documents. OECD guidelines treatment Due to the expanding tax treaty network based generally on internationally accepted transfer pricing principles (such as the OECD Guidelines); the arm’s length principle is generally followed by the DIT. As Kuwait does not have formal transfer pricing regulations, there is always a risk that the tax authorities will not (completely) accept the transfer pricing method used. This risk is however smaller if the transfer pricing method to be used is internationally accepted and the supporting documentation is available. Internal guidelines of the tax authorities (with respect to material cost, design and consultancy fees incurred abroad, related party leases, intra-group financing and intellectual property) will be effective and imposed regardless of the transfer pricing method in place. Priorities/pricing methods The DIT does not have a specific preferred method. However, it may be useful in discussions with the DIT if the transfer pricing method used is based on internationally accepted principles and supporting transfer pricing documents are in place. Transfer pricing penalties Kuwait does not have specific transfer pricing penalties or penalties set for failure to maintain documentation. Penalty relief Kuwait does not have penalty relief. Worldwide transfer pricing reference guide 172
Kuwait (continued) Documentation requirements Currently, Kuwait does not have any formal documentation requirements. Documentation deadlines Currently, Kuwait does not have any formal documentation requirements and hence has no documentation deadlines. Statute of limitations on transfer pricing assessments Kuwait does not have specific transfer pricing assessments. However, certain related party transactions are included in the annual corporate income tax return. Law No. 2 of 2008 provides for a statute of limitations period of five years. Return disclosures/related party disclosures Taxpayers must disclose related party transactions as part of the annual corporate income tax return with respect to material cost, design and consultancy fees incurred abroad, related party leases, intra-group financing and intellectual property. Transfer pricing-specific returns Kuwait does not require a separate return for related party transactions. Frequency of tax audit and transfer pricing scrutiny by the tax authority Every submitted corporate income tax return is audited by the DIT, whereby the related party transactions are also part of this audit. In general, the likelihood of an annual tax audit is characterized as high, as so is the likelihood that transfer pricing will be reviewed as part of an audit. The likelihood that the transfer pricing methodology will be challenged is characterized as low. However, if the intercompany transactions relate to material cost, design and consultancy fees incurred abroad, related party leases, intra-group financing and/or intellectual property, the likelihood of a challenge to the transfer pricing methodology is characterized as high. APA opportunity APAs are not available in Kuwait. Expected reaction to OECD Report on BEPS Up until January 2014, the tax authority has not issued any written document related to the BEPS Report of the OECD. Worldwide transfer pricing reference guide 173
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Worldwide Transfer Pricing Referenc
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Worldwide transfer pricing referenc
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Nigeria 215 Norway 217 Oman 220 Pak
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The content is current as of 28 Feb
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CUP (comparable uncontrolled price)
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Albania (continued) Priorities/pric
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Algeria Taxing authority and tax la
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Algeria (continued) Return disclosu
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Angola (continued) Transfer pricing
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Argentina Taxing authority and tax
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Argentina (continued) Transfer pric
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Australia Taxing authority and tax
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Australia (continued) Priorities/pr
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Australia (continued) Documentation
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Australia (continued) Frequency of
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Austria (continued) Documentation r
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Bahrain Taxing authority and tax la
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Bangladesh (continued) Penalty reli
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Belgium Taxing authority and tax la
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Belgium (continued) Statute of limi
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Bolivia Taxing authority and tax la
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Botswana Taxing authority and tax l
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Brazil (continued) Relevant regulat
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Brazil (continued) Priorities/prici
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Brunei Taxing authority and tax law
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Bulgaria (continued) Transfer prici
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Bulgaria (continued) Return disclos
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Cameroon Taxing authority and tax l
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Canada Taxing authority and tax law
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Canada (continued) Documentation re
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Chile Taxing authority and tax law
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Chile (continued) Return disclosure
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China (continued) Documentation req
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Colombia Taxing authority and tax l
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Colombia (continued) Penalty relief
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Republic of Congo Taxing authority
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Costa Rica Taxing authority and tax
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Croatia Taxing authority and tax la
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Croatia (continued) Frequency of ta
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Czech Republic Taxing authority and
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Denmark Taxing authority and tax la
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Denmark (continued) Documentation d
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Dominican Republic Taxing authority
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Dominican Republic (continued) Expe
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Ecuador (continued) Priorities/pric
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Ecuador (continued) Return disclosu
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Egypt Taxing authority and tax law
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Egypt (continued) Frequency of tax
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El Salvador (continued) Transfer pr
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Estonia Taxing authority and tax la
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Fiji Taxing authority and tax law T
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Fiji (continued) Frequency of tax a
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Finland (continued) Documentation r
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France (continued) Transfer pricing
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France (continued) Documentation re
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France (continued) Expected reactio
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Gabon (continued) Transfer pricing-
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Georgia (continued) Documentation r
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Germany Taxing authority and tax la
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Germany (continued) For late filing
Page 121 and 122: Ghana Taxing authority and tax law
Page 123 and 124: Ghana (continued) APA opportunity T
Page 125 and 126: Greece (continued) Transfer pricing
Page 127 and 128: Guatemala Taxing authority and tax
Page 129 and 130: Honduras Taxing authority and tax l
Page 131 and 132: Hong Kong (SAR) Taxing authority an
Page 133 and 134: Hong Kong (SAR) (continued) APA opp
Page 135 and 136: Hungary (continued) Priorities/pric
Page 137 and 138: Hungary (continued) Documentation r
Page 139 and 140: Iceland Taxing authority and tax la
Page 141 and 142: India Taxing authority and tax law
Page 143 and 144: India (continued) Documentation req
Page 145 and 146: Indonesia Taxing authority and tax
Page 147 and 148: Indonesia (continued) Frequency of
Page 149 and 150: Ireland Taxing authority and tax la
Page 151 and 152: Ireland (continued) Frequency of ta
Page 153 and 154: Israel (continued) Priorities/prici
Page 155 and 156: Italy Taxing authority and tax law
Page 157 and 158: Italy (continued) Transfer pricing
Page 159 and 160: Italy (continued) Frequency of tax
Page 161 and 162: Japan (continued) Transfer pricing
Page 163 and 164: Japan (continued) APA opportunity U
Page 165 and 166: Kazakhstan Taxing authority and tax
Page 167 and 168: Kazakhstan (continued) Frequency of
Page 169 and 170: Kenya (continued) Documentation req
Page 171: Kosovo (continued) Documentation re
Page 175 and 176: Latvia Taxing authority and tax law
Page 177 and 178: Lebanon Taxing authority and tax la
Page 179 and 180: Lithuania Taxing authority and tax
Page 181 and 182: Luxembourg Taxing authority and tax
Page 183 and 184: Former Yugoslav Republic of Macedon
Page 185 and 186: Malaysia Taxing authority and tax l
Page 187 and 188: Malaysia (continued) Frequency of t
Page 189 and 190: Maldives (continued) Statute of lim
Page 191 and 192: Malta (continued) Return disclosure
Page 193 and 194: Mauritius (continued) APA opportuni
Page 195 and 196: Mexico (continued) Transfer pricing
Page 197 and 198: Mexico (continued) Return disclosur
Page 199 and 200: Montenegro (continued) Frequency of
Page 201 and 202: Morocco (continued) Transfer pricin
Page 203 and 204: Myanmar Taxing authority and tax la
Page 205 and 206: Namibia Taxing authority and tax la
Page 207 and 208: Netherlands Taxing authority and ta
Page 209 and 210: Netherlands (continued) Statute of
Page 211 and 212: New Zealand Taxing authority and ta
Page 213 and 214: New Zealand (continued) Frequency o
Page 215 and 216: Nigeria Taxing authority and tax la
Page 217 and 218: Norway Taxing authority and tax law
Page 219 and 220: Norway (continued) Frequency of tax
Page 221 and 222: Oman (continued) Frequency of tax a
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Panama Taxing authority and tax law
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Panama (continued) Expected reactio
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Papua New Guinea (continued) Docume
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Peru Taxing authority and tax law T
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Peru (continued) Frequency of tax a
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Philippines (continued) Transfer pr
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Poland Taxing authority and tax law
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Poland (continued) Transfer pricing
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Poland (continued) Return disclosur
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Poland (continued) APA opportunity
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Portugal (continued) Transfer prici
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Portugal (continued) APA opportunit
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Qatar (continued) OECD guidelines t
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Qatar (continued) Return disclosure
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Romania (continued) Documentation r
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Russian Federation Taxing authority
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Russian Federation (continued) Freq
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Saudi Arabia (continued) Transfer p
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Senegal (continued) Documentation r
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Serbia Taxing authority and tax law
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Singapore Taxing authority and tax
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Singapore (continued) Frequency of
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Slovak Republic (continued) Documen
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Slovenia Taxing authority and tax l
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Slovenia (continued) Transfer prici
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South Africa (continued) Penalty re
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South Korea (Republic of Korea) Tax
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South Korea (Republic of Korea) (co
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Spain (continued) Penalty relief So
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Spain (continued) APA opportunity T
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Sri Lanka (continued) Return disclo
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Sweden (continued) Documentation re
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Switzerland Taxing authority and ta
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Taiwan Taxing authority and tax law
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Taiwan (continued) Return disclosur
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Tanzania Taxing authority and tax l
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Thailand Taxing authority and tax l
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Thailand (continued) Frequency of t
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Turkey (continued) Priorities/prici
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Uganda Taxing authority and tax law
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Ukraine Taxing authority and tax la
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Ukraine (continued) Transfer pricin
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United Kingdom Taxing authority and
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United Kingdom (continued) Transfer
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United States (continued) Transfer
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Uruguay Taxing authority and tax la
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Uruguay (continued) APA opportunity
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Venezuela Taxing authority and tax
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Venezuela (continued) Expected reac
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Vietnam (continued) Relevant regula
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Vietnam (continued) Documentation d
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Zimbabwe Taxing authority and tax l
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Zimbabwe (continued) Relevant regul
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Transfer pricing contacts Area cont
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Jurisdiction contacts • El Salvad
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Jurisdiction contacts • Rep. of C
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Worldwide transfer pricing reference guide 2014

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